Business Current economy: USA reports high unemployment - economy

Current economy: USA reports high unemployment – economy

Here you will find current business news in chronological order, with the latest news coming first.

USA report 14.7 percent unemployment

Friday, May 8, 2:30 p.m .: Unemployment has risen again in the United States. On Friday, the authorities reported an unemployment rate of 14.7 percent in April. According to the announcement, approximately 20.5 million non-agricultural jobs were cut this month. The unemployment rate in the world’s largest economy was still 3.5 percent in February, the lowest level in decades. It then rose to 4.4 percent in March – a relatively small change because the statistics recently could not keep up with the pace of job losses. The values ​​for April can only record the situation until the middle of the month due to delayed data collection.

The United States has been particularly hard hit by the aftermath of the corona pandemic. Many shops are closed, companies have cut their production. The result is unprecedented mass unemployment: within a few weeks the number of unemployment benefit recipients increased ten million times a week, and millions more people apply for assistance every week – just 3.16 million in the past week alone.

The government and Congress have launched huge stimulus packages since the end of March to mitigate the consequences of the crisis. They provided aid totaling approximately $ 2.7 trillion. Around $ 650 billion of this is expected to be available for a program that will largely replace small and medium-sized companies in the coming months with the cost of wages to limit the rise in unemployment. vd / dpa

German exports collapse

Friday, May 8th, 8:00 a.m .: The corona pandemic restrictions hit German foreign trade hard in March. German companies exported goods worth 108.9 billion euros, the Federal Statistical Office said on Friday. The calendar and seasonally adjusted export figures were 7.9 percent lower than in March 2019. Compared to the previous month of February, exports even fell by 11.8 percent. This is the largest decrease in the monthly comparison since the start of the time series in August 1990. Exports were particularly badly affected by the other EU countries: They fell by 11 percent compared to March 2019.

The crisis also had an impact on imports: goods worth EUR 91.6 billion were imported to Germany in March, 4.5 percent less than a year earlier. Compared to the previous month, imports decreased by 5.1 percent. This is the highest monthly decline since January 2009 during the global financial crisis.

Uber lost $ 2.9 billion in the first quarter

Friday, May 8th, 4.50am: The US driver Uber slipped deeper into the red in the first quarter. The bottom line was a loss of $ 2.9 billion after a loss of about $ 1 billion in the same period last year, the company said on Thursday after the market closed. The loss is primarily due to the multi-billion dollar write-downs on the value of company holdings due to the corona pandemic. Uber holds shares in various driving services and food delivery platforms worldwide such as Grab, Yandex or Didi. In contrast, sales increased 14 percent to $ 3.54 billion. Here the company benefited above all from its food delivery division Uber Eats. Uber was encouraged by early signs that the markets would reopen after the lockdown.

Given the curfews, closed shops and factories, fewer people around the world are currently using the car service. In Germany, Uber competes with the taxi and rental car broker Free Now (formerly mytaxi), which has already announced a savings program due to the slump in demand. Reuters

Survey: majority of Germans against purchase premium for cars

Thursday, May 7, 8:30 p.m .: According to a survey, almost two thirds of Germans fundamentally reject the purchase premium for new vehicles demanded by the auto industry because of the Corona crisis. 63 percent say they are against such government incentives when buying a car. Accordingly, supporters of all parties represented in the Bundestag are among the opponents. This emerges from a survey by Infratest-dimap for the ARD “Germany trend”. 22 percent are of the opinion that there should be incentives to buy only climate-friendly cars – only twelve percent are in favor of a premium for all new vehicles.

Chancellor Angela Merkel had spoken to representatives of the automotive industry this week about measures to stimulate the economy in the Corona crisis. Resolutions are expected in June.

Around 3.2 million new first-time jobless claims in the United States

Thursday, May 7, 2:41 p.m .: In the corona virus crisis, the wave of unemployment claims in the United States is waning somewhat. Last week, 3.16 million citizens submitted an initial application, the Washington Department of Labor announced on Thursday. Since March 21, these applications for government support have totaled around 33 million. However, the number of applications has been decreasing continuously for five weeks. The tidal wave peaked at 6.86 million in the week ending March 28.

“The number of initial applications for unemployment benefits has decreased somewhat compared to the previous week. However, it should be noted that the number is still high and the burdens caused by the corona pandemic continue to burden the labor market,” said economist Patrick Boldt from Helaba . The recession worries remained for the time being.

The virus crisis brought an abrupt end to the years-long boom in the US job market and triggered mass unemployment. For Friday’s government job market report for April, economists surveyed by Reuters expect the unemployment rate to jump to 16.0 percent from 4.4 percent in March. At the same time, they put the expected job cuts in the previous month at a record 22 million. Reuters

Puma gets 900 million loan

Thursday, May 7th, 8.27 a.m .: Like the larger competitor Adidas, the Franconian sporting goods company Puma also needs financial support from the state in the Corona crisis. Puma secured a loan of 900 million euros to bridge the time with lower sales and earnings, the company said on Thursday in Herzogenaurach. The state development bank KfW alone takes over 625 million euros, the rest comes from a consortium of eleven other banks. In the first quarter of 2020, sales fell by 1.3 percent to 1.3 billion euros, but the operating result already fell by half to 71.2 million euros. The second quarter will be even worse, the statement said. Puma currently only achieves about 50 percent of its normal income because more than half of the sports and lifestyle stores are closed due to the corona pandemic.

Car rental company Sixt needs a billion dollar loan

Wednesday, May 6, 2020, 6:53 p.m .: Germany’s largest car rental company Sixt receives a loan of up to 1.5 billion euros from the federally-owned credit institution for reconstruction (KfW) and other banks. The capital market is currently not accessible to the family group without an external rating, said CEO Erich Sixt. With the loan for the rental fleet, the company wanted to “get off to a quick start in the market after the crisis,” emphasized board member Alexander Sixt.

The car rental company sent some of the employees on short-time work for three months in March because sales had collapsed as a result of the Corona crisis. Sixt does most of its business with rental cars for tourists and business trips in Europe and the USA.

The banking consortium now gives Sixt “a revolving credit line of up to EUR 1.5 billion with a term of up to two years and standard market interest rates”. The company may not pay a dividend for this during the term, with the exception of the minimum annual dividend of five cents per preferred share. Erich Sixt emphasized that “this is a loan with customary interest rates that is to be repaid in full, and not a free grant”. The consortium consists of KfW, Bayerischer Landesbank, Commerzbank, DZ- and UniCredit-Bank.

Last year Sixt had increased its sales by 13 percent to 3.3 billion euros and made a profit of 247 million euros.

EU forecast: economy in the euro zone collapses by 7.7 percent

Wednesday, May 6, 2020, 11:00 a.m .: According to the EU spring forecast, the economy in the euro zone could shrink by 7.7 percent this year due to the corona crisis and not fully recover again next year. The EU Commission spoke on Wednesday in Brussels when presenting its forecast of a recession of historic proportions. “Europe is experiencing an economic shock that has not existed since the Great Depression,” said Economic Commissioner Paolo Gentiloni. Specifically, after the drastic slump in the 19 countries in the euro zone, the Commission expects new growth of 6.25 percent this year for 2021. For the 27 member states of the European Union as a whole, the forecast for 2020 predicts a minus of 7.5 percent in gross domestic product and a growth of around 6 percent for 2021.

The shock of the pandemic affects all EU countries, but the drop in economic output varies – from 4.25 percent in Poland to 9.75 percent in Greece. The recovery in 2021 will also be different and the bottom line will not make up for the losses, Gentiloni said. Important factors are the pace of the lifting of the Corona requirements, the dependence of the economies on tourism and the financial scope in the household. This inequality threatens the unity of the internal market and the euro area. “We have to face this challenge,” said Gentiloni.

The unemployment rate in the euro zone is forecast to rise from 7.5 percent in 2019 to 9.5 percent this year. A decline to 8.5 percent is expected for next year. For the entire EU, an increase from 6.7 percent in the past year to 9 percent is predicted. The rate is expected to be 8 percent in 2021. Young people in particular will find it much more difficult to find a first job, the commission explains. Inflation is forecast to decline sharply. The inflation rate in the euro zone, which is measured with the so-called Harmonized Index of Consumer Prices, is set at 0.2 percent for 2020 and then at 1.1 percent in 2021. For the EU as a whole, the corresponding values ​​are 0.6 percent this year and 1.3 percent next year.

Because the member states spend billions on crisis management, the deficits are expected to increase sharply. The aggregate value for the government deficit of all member states, which in 2019 was only 0.6 percent of the gross domestic product, will skyrocket to 8.5 percent in 2020. A value of 3.5 percent is then expected for 2021. The debt level of the countries of the euro zone as a whole is therefore forecast to increase from 86 percent in 2019 to 102.75 percent of gross domestic product. Only 60 percent of GDP is actually allowed in the EU, but the rules of the Stability and Growth Pact have been effectively overridden.

The EU Commission points out that the forecast is fraught with extraordinarily large uncertainties. The basis is the expectation that the corona restrictions will gradually be relaxed from May. If the pandemic turns out to be more serious and longer, it could lead to an even greater slump in economic output, it is said. dpa

German industry is breaking orders – minus 15.6 percent in March

Wednesday, May 6, 2020, 8.35 a.m .: German business has broken off new business at an unprecedented rate because of the Corona crisis. In March, it collected 15.6 percent fewer orders than in the previous month, as the Federal Ministry of Economics announced on Wednesday. This is the sharpest decline since statistics began in 1991.

Economists surveyed by Reuters had only expected a drop of 10.0 percent. “In the wake of the global economic shock caused by the corona pandemic and measures to curb it, industrial order intake plummeted in March,” the ministry said. “A sharp decline in production from March due to Corona can be expected.” Economists fear that things will get worse. “March is the first part of the tragedy,” said DekaBank economist Andreas Scheuerle. “The slump in incoming orders shows the force with which Corona hits German industry. And yet that is only half of the truth, because the collapse of new orders will also result in a wave of order cancellations.”

Orders for capital goods – which include vehicles, machines and systems – fell above average in March at 22.6 percent. “The epicenter of order weakness was the automotive industry,” said Scheuerle. “No other industrial sector was more affected by the production stops.” There was only a 7.5 percent decline in advance payments, and only 1.3 percent in consumer goods. “The low may come in April, and then the consumer goods industry should also feel the slump,” LBBW economist Jens-Oliver Niklasch expects. “An improvement is not expected before May, provided that we see easing without the pandemic flare up again. The cleanup will keep the economy busy for years to come.” Domestic orders fell 14.8 percent in March from the previous month. Orders from abroad even decreased by 16.1 percent.

Current surveys among industrial companies do not give hope for an early turnaround. The business climate in German industry fell to its lowest level since March 2009, according to the Ifo Institute. The spread of the virus and measures to contain it have recently paralyzed parts of the economy – partly because supply chains have been interrupted. Reuters

Wednesday, May 6, 2020, 2.29 a.m .: As a result of the Corona crisis, the Federal Government is expecting a sharp rise in Hartz IV benefits. Due to the pandemic, the Federal Ministry of Labor assumes that there will be up to 1.2 million additional communities of needs in the next six months, as the Ministry reports to a parliamentary request from the parliamentary group on the left in the Bundestag. The government ‘s answer lies in the newspapers of the Funke media group in front. According to the ministry, if the benefits are received for six months, the government expects additional government expenditure of 9.6 billion euros.

In its answer, the federal government explains the increased benefit in the corona crisis, among other things, with the easier permits during the pandemic. Accordingly, no more asset audits would take place from March to June inclusive. Also, the personal appearance in the job center is no longer a mandatory requirement for receiving financial support.

Tuesday, May 5, 2020, 11:13 p.m .: Apartment broker Airbnb plans to cut jobs on a large scale because of the corona pandemic, according to US media. The number of employees is falling by about a quarter, around 1900 jobs worldwide are affected, The Information, Bloomberg, CNBC and Wall Street Journal cited in an email from Airbnb boss Brian Chesky to the employees. According to Chesky, the crisis brought tourism to a standstill, Airbnb was hit hard, and sales should fall by more than half this year. Airbnb has announced an IPO for 2020, but doubts are now growing due to the difficulties.

According to the Reuters news agency, those affected receive a severance payment of four months’ wages, get one year of health insurance and are allowed to keep their computers. The company initially did not comment. Reuters / dpa

Tuesday, May 5, 2020, 12 noon: Lufthansa plans to offer more flights again from June. The company is preparing “a noticeable expansion of our flight schedule”, said CEO Carsten Spohr at the company’s general meeting. However, the construction is being carried out very slowly – Lufthansa does not expect it to reach the old traffic level of 2019 before 2023. Even if air traffic will recover to some extent by 2023, the airline has around 10,000 employees on board, according to Spohr. He wants to avoid layoffs, especially with new part-time models for pilots, among others.

Spohr did not initially give any details on the flight schedule planned for June. Lufthansa currently transports less than one percent of the normal number of passengers, around 3000 guests a day. The Group subsidiaries Austrian, Brussels Airlines and Air Dolomiti have ceased all flight operations since March. Only about 60 of the approximately 760 aircraft currently in use across the Group, many of them as freighters.

The Lufthansa boss also commented on the negotiations with the federal government on state aid amounting to around nine billion euros. He expects that the talks with the federal government “will lead to a successful conclusion”. Nobody in the company “has an interest in the talks failing”. The state is expected to join Lufthansa as a shareholder with a blocking minority, i.e. a share of more than 25 percent, and will file two mandates on the Supervisory Board. Spohr wants to prevent politics from exerting too much influence. Therefore, the loans and participation would have to be repaid “as soon as possible”.

Spohr, however, made it clear that Lufthansa was “only as a group” competitive against the three major competitors in China, the United States and the Persian Gulf. In doing so, he confirmed that the group did not want to part with any of the subsidiaries, although some of them, such as Brussels Airlines and Austrian, were already in trouble before the Corona crisis. He also wants to stick to the second brand Eurowings, but the cheap spin-off should be organized much less complex than in the past. Jens Flottau

Lufthansa before unusual general meeting

Tuesday, May 5, 2020, 8:45 a.m .: Lufthansa invited its shareholders to the most unusual general meeting in history. The event will take place on the Internet this Tuesday instead of in the Jahrhunderthalle in Frankfurt. The reason for this is the precautionary measures against the corona pandemic, which has almost brought the business of Europe’s largest aviation group, with the exception of freight, to a standstill.

Lufthansa has reduced its passenger operations to a minimum and only flies just under 1 percent of the passengers. Their daily number of guests dropped from an average of 350,000 per day to around 3000. Despite massive short-time work, many fixed costs continue to run, so that, according to CEO Carsten Spohr, the company loses one million euros in cash every hour. In addition to interest rates, the kerosene contracts, which had assumed that the price of oil would be much higher than the current one, were a burden. The CEO said in his previously published speech that there are currently more than four billion cash reserves.

The situation in the talks about state aid is also complicated by the multi-nationality. With Austrian, Swiss and Brussels Airlines, the Dax Group has three former state companies from neighboring countries in its portfolio. Only Switzerland has so far pledged a 1.4 billion euro credit line, largely secured by the state. Austria and Belgium insist on location guarantees for their help.

In Germany, the company is still waiting for the precise form of government aid between silent participations and direct participation. Fund companies such as Deka and the cooperative Union Investment supported the course of CEO Spohr before the meeting against excessive government control. However, portfolio manager Michael Gierse warned that Spohr should not go overboard in negotiations with the federal government. The corona crisis also offers a smaller Lufthansa opportunities to operate a more modern fleet and to significantly reduce emissions of environmentally harmful emissions.

Spohr has already prepared shareholders and employees for cuts. While the owners are to waive a dividend for the actually successful financial year 2019, the group’s 130,000 employees are threatened with the loss of around 10,000 jobs. It is still unclear whether this can be achieved through part-time models or whether operational layoffs need to be announced. The catering subsidiary LSG Sky Chefs with around 35,000 employees worldwide was already on sale before the crisis. It is as idle as the airline business. The fleet is expected to shrink by 100 aircraft. dpa



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